Feb. 25 (Bloomberg) -- Imperial Tobacco Group Plc is
marketing bonds in Europe for the first time since 2011 after
borrowing costs fell to the lowest in nine months.

Europe’s second-biggest tobacco company is selling the
equivalent of $3.1 billion of notes in euros and pounds while BP
Plc and Renault SA are selling bonds in euros, according to
people familiar with the deals. The average yield on investment-grade bonds in euros fell to 1.89 percent, the lowest since May
30, according to Bank of America Merrill Lynch index data.

Corporate bond yields are falling amid speculation the
European Central Bank will reduce or hold interest rates at
record lows to maintain price stability and a fledgling
recovery. While the euro-area economy exited a seven-quarter-long recession in December, manufacturing is showing signs of
slowing and inflation remains less than half the European
Central Bank’s 2 percent target.

“Europe is still limping along in a lumpy, uneven
recovery, so yields probably deserve to be as low as they are,”
said Steve Logan, a fund manager at Scottish Widows Investment
Partnership Ltd. in Edinburgh, which manages about $242 billion.
“Companies want to get their deals done at the start of the
year in case the markets turn choppy later. You don’t want to be
a hostage to fortune.”

Imperial Tobacco is selling 1 billion euros ($1.4 billion)
of seven-year bonds that will be priced to yield 95 basis points
more than the mid-swap rate and 650 million euros of 12-year
notes at a spread of 130 basis points, according to a person
familiar with the matter. The Bristol, England-based company
also plans to issue 500 million pounds ($834 million) of 18-year
bonds to yield 155 basis points more than U.K. government debt,
said the person, who asked not to be identified because they’re
not authorized to speak about it.

BP, Renault

Imperial Tobacco last sold euro-denominated debt in
November 2011 when it priced eight-year bonds to yield 250 basis
points more than swaps, according to data compiled by Bloomberg.

BP, Europe’s second-largest oil company, is marketing 1
billion euros of seven-year bonds to yield 65 basis points more
than swaps and 1 billion euros of 12-year notes at a spread of
85 basis points, according to another person. The London-based
company is issuing the bonds through its BP Capital Markets Plc
unit.

Renault, based in the Paris suburb of Boulogne-Billancourt,
is selling 500 million euros of seven-year securities to yield
175 basis points more than the mid-swap rate.